Correlation Between American Express and Pantheon Resources
Can any of the company-specific risk be diversified away by investing in both American Express and Pantheon Resources at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining American Express and Pantheon Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Express and Pantheon Resources Plc, you can compare the effects of market volatilities on American Express and Pantheon Resources and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in American Express with a short position of Pantheon Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Express and Pantheon Resources.
Diversification Opportunities for American Express and Pantheon Resources
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between American and Pantheon is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding American Express and Pantheon Resources Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pantheon Resources Plc and American Express is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on American Express are associated (or correlated) with Pantheon Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pantheon Resources Plc has no effect on the direction of American Express i.e., American Express and Pantheon Resources go up and down completely randomly.
Pair Corralation between American Express and Pantheon Resources
Considering the 90-day investment horizon American Express is expected to generate 0.32 times more return on investment than Pantheon Resources. However, American Express is 3.08 times less risky than Pantheon Resources. It trades about 0.28 of its potential returns per unit of risk. Pantheon Resources Plc is currently generating about 0.03 per unit of risk. If you would invest 27,269 in American Express on September 2, 2024 and sell it today you would earn a total of 3,199 from holding American Express or generate 11.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Express vs. Pantheon Resources Plc
Performance |
| Timeline |
| American Express |
| Pantheon Resources Plc |
American Express and Pantheon Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Express and Pantheon Resources
The main advantage of trading using opposite American Express and Pantheon Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Express position performs unexpectedly, Pantheon Resources can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Pantheon Resources will offset losses from the drop in Pantheon Resources' long position.| American Express vs. 360 Finance | American Express vs. Atlanticus Holdings | American Express vs. Qudian Inc | American Express vs. Enova International |
| Pantheon Resources vs. CGX Energy | Pantheon Resources vs. Eco Oil Gas | Pantheon Resources vs. Reconnaissance Energy Africa | Pantheon Resources vs. Sintana Energy |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Money Managers module to screen money managers from public funds and ETFs managed around the world.
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